06 July 2013

A better way of becoming rich

A Social Policy Bond regime could have many advantages over the ways in which we currently try to achieve social goals. These include, most obviously, efficiency, stability (of policy objectives), transparency leading to greater public engagement and buy-in. 

A less obvious benefit of a Social Policy Bond regime is that they would be a means whereby private gain would be strongly, visibly and inextricably correlated with public benefit. Some bondholders, whether institutions or individuals, would start out rich and, if their bonds rose in value, would become richer. But working successfully to achieve desired social goals would most probably be seen as a laudable way of acquiring wealth. There are intangible benefits from having people or institutions grow rich in this way. There are many disaffected people who, in some cases no doubt justifiably, view with suspicion or alarm the very high incomes or profits of corporations engaged in activities of little obvious net social or environmental benefit. They are also unconvinced that ‘trickle-down’ occurs to any meaningful degree. Wealth, in these people’s eyes, must inevitably result from exploitation, either of other people or the commons. Social Policy Bonds would shift this worldview and, by helping people take a more positive view of the act of earning an income and accumulating wealth, could make for a more cohesive society. 

A socially acceptable way of becoming wealthy would also make it more politically feasible to tax less socially desirable ways more heavily – not an end in itself, but a means of raising more tax revenue for redistribution or increasing the number and quality of public goods and services. Corporations, to ensure their own survival, would move out of activities that are financially profitable, but socially and environmentally destructive. 

I have posted before about how Social Policy Bonds could bring about a new type of organization: one whose structure, composition and activities would be entirely subordinated to the goals that society wants to achieve. In doing this, a bond regime could bring about the gradual, but perhaps necessary, demise of corporations whose long-term negative impacts, simply because they do not register in today’s markets, substantially outweigh their positive contribution to society.

No comments: